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Centerra to pay $7.4M to settle False Claims Act allegations
By Marjorie Censer
February 1, 2016 at 5:27 PM

The Justice Department said today that Centerra Services International has agreed to pay $7.4 million to settle allegations it double-billed and inflated labor costs in connection with a firefighting and fire protection services contract in Iraq.

Centerra, previously known as Wackenhut Services, was a subcontractor to Kellogg Brown & Root, who held the Army's logistical support contract in theater. From 2008 to 2010, the government alleged, Wackenhut inflated the costs of its labor "by billing the salaries of certain managers as direct costs under the subcontract, when those salaries had already been charged as indirect costs."

Additionally, the government alleged the company "artificially inflated its labor rate by counting its costs for holidays, vacation, sick leave, rest and recuperation and other variable labor costs twice in calculating the rate."

The settlement resolves a lawsuit filed by a whistleblower, who will receive $1.3 million as his share.

The resolved claims remain allegations, and there was no determination of liability.

(UPDATE 10:45 a.m., Feb. 2)

In a statement provided to Inside Defense, Paul Donahue, Centerra's president and chief executive, said the company "made a difficult business decision to settle rather than prolong this dispute over how to account for activities that occurred as long as eight years ago in Iraq.

"The company denies categorically the Government's allegations," Donahue continued. "The dispute arises because of the complexities of how to account for labor costs as the Government closed bases and moved personnel in Iraq. As a subcontractor, the company moved its personnel and firefighting equipment to ensure effective fire protection services as the prime contractor performed the inherently complex task of operating, drawing down and closing dozens of bases and moving thousands of employees in Iraq during this period."

Analyst sees 'problem child' F-35A as 'likely bill-payer'
By Tony Bertuca
February 1, 2016 at 4:52 PM

A defense budget analyst contends that the Air Force will likely use its F-35A Joint Strike Fighter program as a "bill-payer" in the fiscal year 2017 budget because of its increasing commitment to the KC-46 aerial refueling tanker and Long-Range Strike Bomber.

Kate Blakeley, an analyst with the Center for Strategic and Budgetary Assessments who used to work for the Congressional Research Service, said the Air Force's potential cuts to F-35A spending will likely be met with little resistance from Congress because the program is increasingly seen as "kind of a problem child."

"You've already had a flattening of the acquisition profile, you've already had a lot of skepticism . . . in Congress about its capabilities, about the timeline, about the software, about the problems with the helmet," she said during a presentation today.

"So you won't have quite as much resistance in Congress to cutting it as something like the A-10, where you can make a much more clear-cut narrative about its operational capabilities and its operational utility, not least because it's actually flying," she continued. "Basically, I think the Air Force loves the LRS-B a little more than they love the F-35. They like the F-35, but they love the LRS-B right now."

Blakeley also said Congress could be headed toward another fiscal showdown over defense spending, especially the overseas contingency operations account.

"For fiscal year 2017, the overall OCO level will be closely watched and is likely to become a piece of political ammunition," she said. "It will be a leading indicator of how the politics of this year's budget are going to go."

Blakeley pointed to recent statements from House Armed Services Committee Chairman Mac Thornberry (R-TX), who has indicated he will attempt to put additional money in the Pentagon's OCO account if the Obama administration's Feb. 9 request is below $58.8 billion. LINk: 175466

"The GOP will argue that $58.8 billion was a floor, but I think the Obama administration sees it as a ceiling," Blakeley said.

The INSIDER daily digest
By John Liang
February 1, 2016 at 2:22 PM

Kicking off this Monday INSIDER Daily Digest with coverage of the Pentagon operational test and evaluation director's annual report, plus more.

Cybersecurity is still a concern for DOD's director of operational test and evaluation:

Chief weapons tester signals continued cyber concerns

The Pentagon's chief weapons tester is concerned that the Defense Department remains vulnerable to cyberattacks and is unable to properly test weapon systems given the shortage of experts and "red teams," who have been hired away by the private sector.

Document: DOT&E's FY-15 annual report

(Stay tuned to Inside Defense throughout the week for more coverage of the DOT&E report.)

The House Armed Services Committee chairman would up FY-17 defense funding should the administration seek less spending than agreed upon for DOD's OCO account:

Thornberry telegraphs coming FY-17 budget fight over OCO

The chairman of the House Armed Services Committee indicated Monday that he would attempt to increase fiscal year 2017 defense funding should the Obama administration seek less spending than agreed upon for the Defense Department's overseas contingency operations account.

The first Air Force One recapitalization contract is out:

Air Force awards first contract to Boeing for Presidential Aircraft recapitalization

The Air Force on Friday awarded Boeing a $25.7 million contract to perform risk reduction for the Presidential Aircraft Replacement program.

(Need more aircraft news? Check out our Notification Center, where you can sign up to receive email alerts whenever a related story is posted.)

The head of STRATCOM spoke publicly for the first time about China's hypersonic weapons testing program:

China conducts sixth 'successful' hypersonic weapons test, STRATCOM chief says

China has notched another success in its effort to develop a hypersonic weapon, conducting a sixth test of a hyperglide vehicle that U.S. intelligence assesses as favorable to Beijing's effort to develop a next-generation offensive strike weapon, according to a senior U.S. defense official.

NAVSEA is still seeking additional international customers for the V-22 Osprey:

Navy seeking international V-22 customers to fill 'bucket' in procurement

Naval Air Systems Command is still seeking additional international customers for the V-22 Osprey tiltrotor helicopter, with the U.S. military's procurement of the Bell-Boeing aircraft projected to temporarily slow down in the coming years.

Army officials are weighing the option of a separate, two-channel version of the JTRS handheld Rifleman radio:

Army mulling over option of two-channel handheld Rifleman radio

ABERDEEN PROVING GROUND, MD -- The Army is a few months away from moving to operational testing of the Joint Tactical Radio System's handheld Rifleman radio, as officials weigh the option of a separate, two-channel version.

The week ahead
By Tony Bertuca
February 1, 2016 at 10:37 AM

The week ahead is dominated by Defense Secretary Ash Carter's speech on the fiscal year 2017 budget, though Congress has scheduled a variety of hearings on acquisition reform and the security situation in Afghanistan.

Monday

The Pentagon's chief weapons tester has released his annual report to Congress. Stay tuned to Inside Defense for in-depth coverage.

Tuesday

Carter is scheduled to make a speech on the FY-17 budget at the Ritz-Carlton in Washington.

Link: https://www.economicclub.org/page.cfm/go/events/

Gen. John Campbell, the commander of U.S. forces in Afghanistan, will testify before the House Armed Services Committee.

Link: http://1.usa.gov/1RVGWQ8

Harris announces quarterly earnings at 8:30 a.m.

Oshkosh holds a shareholders' meeting at 9 a.m.

Wednesday

Boeing, Booz Allen and Science Applications International Corp. executives present at the Cowen & Co. aerospace and defense conference in New York.

The House Armed Services Committee will hear from a panel of former defense officials regarding acquisition reform.

Link: http://1.usa.gov/1UD0Mhh

The Senate Armed Services Committee is scheduled to hear from outside experts on U.S. policy in the Asia Pacific.

Link: http://1.usa.gov/1UD1JGe

Thursday

Campbell is scheduled to testify before the Senate Armed Services Committee on Afghanistan.

Link: http://1.usa.gov/1VCyi7q

Leidos executives speak at the Cowen & Co. conference.

The House Armed Services Committee has scheduled a hearing on Navy strike fighters, but details have yet to be made final.

Inside the Army highlights
By Sebastian Sprenger
February 1, 2016 at 9:05 AM

Some must-reads from this week's issue of Inside the Army:

1. The Army is a few months away from moving to operational testing of the Joint Tactical Radio System's handheld Rifleman radio, as officials weigh the option of a separate, two-channel version.

Full story: Army mulling over option of two-channel handheld Rifleman radio

2. The Government Accountability Office has flagged improper use of some bridge-contract arrangements by the Army Contracting Command at Redstone Arsenal, AL, prompting the service to promise corrective guidance for contracting officers this spring.

Full story: Army preparing new bridge-contract guidance after auditors flag errors

3. The Army has set the release of an industry solicitation for the Joint Tactical Radio System's airborne radio for this summer, pending required documentation and briefings, according to the service's tactical radio program manager.

Full story: Summer release set for Army airborne radio request for proposals

Inside the Navy highlights
By Lee Hudson
February 1, 2016 at 9:00 AM

Some must-reads from this week's edition of Inside the Navy:

1. The Marine Corps will kickoff developmental testing of its upgraded legacy amphibious vehicles two months early because contractor Science Applications International Corp. delivered the vehicles to the service ahead of time.

Full Story: Marines will kickoff testing of upgraded amphib vehicles two months early

2. Naval Air Systems Command is still seeking additional international customers for the V-22 Osprey tiltrotor helicopter, with the U.S. military's procurement of the Bell-Boeing aircraft projected to temporarily slow down in the coming years.

Full Story: Navy seeking international V-22 customers to fill 'bucket' in procurement

3. The recent deployment of the Theodore Roosevelt Carrier Strike Group was the first time the E-2D Advanced Hawkeye and Naval Integrated Fire Control-Counter Air system were used to bring a broader radar range.

Full Story: Roosevelt carrier deployment sees first use of E-2D, NIFC-CA

The INSIDER daily digest
By John Liang
January 29, 2016 at 1:52 PM

Kicking off this Friday INSIDER Daily Digest with some Air Force unmanned system news and more.

The Air Force wants industry ideas on how to get unmanned aerial vehicles to be aware of their surroundings:

Air Force polling industry on remotely piloted aircraft sense-and-avoid options

The Air Force is seeking solutions for remotely piloted vehicle sense-and-avoid capabilities across the national, international and military airspace, according to a Jan. 20 sources-sought notice posted on Federal Business Opportunities website.

Document: Air Force RPA sense and avoid RFI

Keep an eye out for the results of tests on a proposed Global Hawk sensor:

MS-177 sensor would bring tactical agility, persistence to Global Hawk

As Northrop Grumman works to bring the Global Hawk to parity with Lockheed's U-2 Dragon Lady, a next-generation sensor slated for testing this year could promise greater agility and persistence for the unmanned aircraft.

(Need more unmanned systems news? Check out our Notification Center, where you can sign up to receive email alerts whenever a related story is posted.)

The Air Force is closing in on awarding a third rocket engine prototype contract:

Air Force to broaden rocket engine investment in FY-17 budget request

Air Force Secretary Deborah Lee James indicated this week that the service is very close to awarding a third public-private partnership agreement to build a new rocket engine prototype, even as it looks to broaden the scope of its investment in fiscal year 2017 to focus on a more holistic approach to eliminating reliance on Russian rocket engines.

Document: Senate hearing on military space launch policy

The Air Force will soon have an idea of the impact of a two-year delay to the GPS OCX system:

Air Force to measure impact of OCX delay on early GPS III launch plans

The Air Force is currently measuring the impact a two-year schedule slip to the next-generation Global Positioning System ground segment may have on the launch and early operations of the first GPS III satellites.

An Air Force advisory board is learning new things about integrating a laser onto a C-130 gunship:

AFSAB: Early study results have near-term implications for directed energy

The Air Force Scientific Advisory Board kicked off its 2016 studies during its Jan. 19 winter meeting, and its fast-track study on directed energy has already garnered insights into the high-powered laser and active denial system's integration onto an AC-130J gunship.

Looks like the Marine Corps will be able to test its upgraded Assault Amphibious Vehicle a bit early:

Marines will kickoff testing of upgraded legacy amphib vehicles two months early

CHARLESTON, SC -- The Marine Corps will kickoff developmental testing of its upgraded legacy amphibious vehicles two months early because contractor Science Applications International Corp delivered the vehicles to the service ahead of time.

LRS-B classification
By Courtney Albon
January 29, 2016 at 12:47 PM

The Air Force is crafting a "security posture" for the Long-Range Strike Bomber program that will determine the appropriate classification levels for information related to the bomber's development.

The service confirmed to Inside Defense this week that the review is ongoing and should be completed "within the next few months."

Northrop Grumman was awarded the contract in October -- the Air Force has refused to disclose the initial contract value or reveal any of the subsystem suppliers -- and Lockheed Martin and Boeing, who teamed for the competition, immediately protested.

A decision is expected from the Government Accountability Office next month.

SOS International acquires New World Solutions
By Marjorie Censer
January 29, 2016 at 10:40 AM

Defense contractor SOS International said today it has purchased New World Solutions, a defense and intelligence contracting firm specializing in imagery science, cyber analytics and research and development.

New World's major customers include the Office of the Secretary of Defense, the National Ground Intelligence Center, the National Geospatial-Intelligence Agency, the National Reconnaissance Office and other intelligence agencies, SOSi said.

Under the deal, Harry Looney, New World's president and co-founder, will remain at the helm of what will become a subsidiary of SOSi. The New World subsidiary will be included in SOSi's intelligence solutions group.

The acquisition, SOSi said, will increase the company's presence within the intelligence community.

Inside the Air Force highlights
By Courtney Albon
January 29, 2016 at 9:00 AM

Some must-reads from this week's issue of Inside the Air Force:

1. An initial delivery of four A-29 Super Tucano's to the Afghan Air Force is meeting the force's high demand for close-air-support capabilities.

Full story: Afghan Air Force receives first delivery of four A-29 Super Tucanos

2. As it looks to mitigate the effect of an additional two-year delay to the delivery of the next-generation GPS ground station, the Air Force expects to complete a revised cost estimate for the program and determine whether it will trigger a Nunn-McCurdy breach.

Full story: Air Force to measure impact of OCX delay on early GPS III launch plans

3. An Air Force Scientific Advisory Board fast-track study on directed energy is yielding early results and garnering interest and participation from Air Force Special Operations Command.

Full story: AFSAB: Early study results have near-term implications for directed energy

MDA conducts non-intercept GMD flight test
By John Liang
January 28, 2016 at 8:05 PM

The Missile Defense Agency announced on Thursday it had conducted a non-intercept flight test of the Ground-based Midcourse Defense system. 

An Air Force C-17 aircraft carried and launched "a target representing an intermediate-range ballistic missile . . . over the broad ocean area west of Hawaii," MDA spokesman Rick Lehner said in a statement. A three-stage Ground-Based Interceptor was launched from Vandenberg Air Force Base, CA, for the purpose of testing the alternate divert thrusters of the system's Capability Enhancement-II Exoatmospheric Kill Vehicle. 

During the test, an AN/TPY-2 radar located at the Pacific Missile Range Facility on Kauai, HI, "detected the target and relayed target track information to the Command, Control, Battle Management, and Communication system," the statement continues, adding: "The Sea-Based X-band radar, positioned in the broad ocean area northeast of Hawaii, also acquired and tracked the target. The GMD system received track data and developed a fire control solution to engage the target. The test also included a demonstration of technology to discriminate countermeasures carried by the target missile."

The CE-II EKV "performed scripted maneuvers to demonstrate performance of alternate divert thrusters," according to the statement. "Upon entering terminal phase, the kill vehicle initiated a planned burn sequence to evaluate the alternate divert thrusters until fuel was exhausted, intentionally precluding an intercept."

The test was meant to evaluate six years of remedial work that aims to resolve engineering problems that have bedeviled the program since 2010 -- triggering schedule delays and developmental cost growth of more than $1.7 billion for the weapon's CE-II EKV. As Inside Defense reported this week:

"The primary objective is to fully flush out -- and fully test -- the Alternate Divert Thrusters," Vice Adm. James Syring, MDA director said in a Jan. 19 address at the Center for Strategic and International Studies. The "alternate" thrusters on the Capability Enhancement II exoatmospheric kill vehicle being tested "have been redesigned that address the fundamental problem back in 2010," Syring said.

In 2010, the GBI program suffered back-to-back failures; in January, the first attempt to intercept a target with the CE II kill vehicle -- dubbed FTG-06 -- failed; a follow-on December attempt, FTG-06a, also failed.

A highly redacted copy of the 144-page FTG-06a Failure Review Board, dated Aug. 9, 2011 and made public in response to a Freedom of Information Act request does not reveal any findings regarding why the kill vehicle failed to hit its target.

Syring, however, in his address last week to CSIS said the root cause of the 2010 problems were tied to performance of the inertial measurement unit -- or IMU.

Carter cagey on OCO
By Courtney McBride
January 28, 2016 at 5:07 PM

Defense Secretary Ash Carter was noncommittal Thursday when asked if the department's overseas contingency operations spending in fiscal year 2017 could rise above the $59 billion figure outlined in the Bipartisan Budget Agreement of 2015.

Addressing reporters at the Pentagon, Carter said the department will “submit a budget based on our anticipated needs over the next year.”

“The theory of OCO is variable costs that cannot be built in and predicted,” he said. “And this year won't be any different from any other year.”

Noting that OCO funding is “supposed to be responsive to what really happens,” he said the department will “just have to see how it goes” with respect to increased spending.

Congressional Republicans are concerned that the Obama administration may seek to hold OCO spending to a maximum of $59 billion, while lawmakers had envisioned the figure as a minimum.

The secretary will discuss the defense share of the FY-17 budget during an appearance at the Ritz-Carlton in Washington on Feb. 2. The administration will release its full budget request on Feb. 9.

Cyber scrutiny
By John Liang
January 28, 2016 at 3:21 PM

Senate Armed Services Committee Chairman John McCain (R-AZ) is promising increased scrutiny of the Obama administration's cybersecurity policies.

As Inside Cybersecurity reports:

"Armed Services is going to get more involved [on cyber] than it ever has," McCain told Inside Cybersecurity on Wednesday.

McCain first promised in November to dig into cyber issues after the Paris terrorist attacks threw a spotlight on encrypted communications and "dark spaces" within the Internet. The administration's "wholly lacking" report on cyber deterrence further provoked the Armed Services chairman earlier this month.

McCain on Wednesday promised hearings and close collaboration with the Intelligence Committee -- all aimed at crafting the national strategy on cybersecurity that he claims the Obama administration has failed to produce.

Senate Intelligence Chairman Richard Burr (R-NC) "has committed" to such a collaboration "and I think Dianne will too," McCain said, referring to Intelligence ranking member Dianne Feinstein (D-CA).

The Obama administration, naturally, rejects the characterization of its cybersecurity efforts.

"We have an extensive record of action and accomplishment on cybersecurity," a White House spokesman said, pointing to executive orders on information sharing and other issues, efforts to improve the security of federal networks and a panoply of initiatives undertaken in 2015.

Feinstein, asked about the charge that the administration lacks an overarching cyber strategy, focused on the encryption issue, saying it was "very difficult" to pull together a strategy given differences between law enforcement and the tech community.

"The answer," McCain said, "is you get a policy from this administration. What is an attack? What is the response to an attack? You can't address encryption until you have a policy."

Need more defense-related cybersecurity news? Check out Inside Defense's Notification Center, where you can sign up to receive email alerts whenever a related story is posted.

The INSIDER daily digest
By John Liang
January 28, 2016 at 2:58 PM

We start off this Thursday INSIDER Daily Digest with coverage of the National Commission on the Future of the Army's final report, released today, plus more.

The commission thinks the Army National Guard should get to keep some of its Apache attack helicopters:

Army commission recommends that some Apaches to stay in the National Guard

An expert commission chartered by Congress has recommended that the Army National Guard be allowed to keep some AH-64 Apache helicopters in its ranks, a proposal that would throw a wrench into Army plans to move all such helicopters into the active service in an effort to save money.

More on the commission's report:

Congressional advisers recommend cutting two infantry brigade combat teams

The Army could shed two infantry brigade combat teams to fill out understaffed positions elsewhere in the service, according to a just-released report by the National Commission on the Future of the Army.

Document: National commission on the future of the Army's final report

(Stay tuned for more coverage in next week's Inside the Army.)

Defense contractors' earnings season continues to roll on:

Defense contractors look to international sales, new technology for growth

Some of the largest contractors, reporting generally flat sales in 2015, say they continue to pursue international sales and spend on research to find future growth.

(Need more defense business news? Check out our Notification Center, where you can sign up to receive email alerts whenever a related story is posted.)

Don't miss the Navy's ongoing effort to develop more autonomous, more capable UUVs:

Chief of naval research outlines service's contributions to Third Offset Strategy

The Navy's development of unmanned underwater vehicles, cyber capabilities and electronic-warfare applications are among the service's primary contributions to the Third Offset Strategy, the Pentagon's new initiative to pursue leap-ahead warfighting technologies.

On the flip side, DARPA is looking for ideas to defend against enemy underwater drones:

DARPA seeks ways to protect naval operations from underwater drones

The Pentagon's advanced research arm is seeking industry's input to find ways to protect U.S. naval operations in the open ocean from adversarial unmanned underwater vehicles.

Document: DARPA notice on OOCUUV study

Keep an eye out for a Pentagon body armor industrial base sustainment strategy:

DOD working hard body armor industrial base sustainment strategy

The Pentagon is crafting a sustainment strategy to address perceived risks to the hard body armor industrial base, according to a recent report labeled "for official use only" and signed by Defense Department acquisition chief Frank Kendall.

MDA is scheduled to conduct a GMD flight test this week:

Missile defense flight test to evaluate six years of remedial work on GBI kill vehicle

The Missile Defense Agency plans a flight test of the Ground-based Midcourse Defense system to evaluate six years of remedial work that aims to resolve engineering problems that have bedeviled the program since 2010 -- triggering schedule delays and developmental cost growth of more than $1.7 billion for the weapon's Capability Enhancement II kill vehicle.

Don't expect a joint task force in the Western Pacific to be set up anytime soon:

Harris: U.S. will not establish joint task force in the Western Pacific

The commander of all U.S. forces in the Pacific, echoing his predecessor, does not want to establish a joint task force for the Western Pacific.

Nicholson nomination
By John Liang
January 28, 2016 at 11:06 AM

The Senate Armed Services Committee is holding a hearing this morning on the nomination of Army Lt. Gen. John Nicholson to become the next head of U.S. forces in Afghanistan.

Prior to the hearing, Nicholson submitted answers to a detailed list of advance policy questions.

One of those queries involved preventing U.S. monetary support to the Afghan insurgency, from which the general wrote that other combatant commands could take two "key lessons":

"The first lesson is that combatant commands should place strong emphasis on thorough vendor vetting processes which, if implemented properly, preempt fraud and prevent contracting with the enemy. The second lesson has to do with the importance of coordination between the combatant command, the intelligence task force, and the Head of the Contracting Activity (HCA). Each of these links provides vital information on the second and third order effects of the program at both the operational and strategic levels."